
V.- 




THE FINAI^CIAL REVULSION" OF 1857. 



ME. WALLET'S ADDRESS 



]!E1-(»1U'; THE 



AMERICAN STATISTICAL ASSOCIATION, 



FEBRUARY lO, 1858. 






J^^- 




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THE FINANCIAL REVULSION OP 1857. 



AX 



ADDRESS 



DELIVERED BEFORE THE 



AMERICAN STATISTICAL ASSOCIATION, 



AT BOSTON, 



FBBKUABY 10, 1858, 



BY 



SAMUEL HURD W ALLEY, 



BOSTON: 

PUBLISHED BY THE AMEEIICA.N STATISTICAL ASSOCIATION. 

TRESS OF T. R. MARVIN. 

1858. 






At a meeting of the American Statistical Association, February 
10, 1858, it was 

" Voted, That the thanks of the Association be presented to the 
Hon. S. H. Wallet, for his learned and able Address, and that he be 
requested to furnish a copy for publication." 

J. B. FELT,. Secretary. 






ADDRESS 



To the Members of the American Statistical Association : 

Gentlemen : 

At the request of your government, made late in October 
last, I prepared a paper on the present Financial Revulsion ; 
but after it was completed, I ascertained that the meeting of the 
Society would not be held until January. By some mishap, I 
did not receive the Secretary's notice of the annual meeting, 
and have been requested to read the paper at a special meeting, 
called for the purpose. I am quite willing to comply with 
your request, but must ask you to remember that all financial 
revulsions not only differ from each other, but vary continu- 
ally in their distinctive features, — Protean in their forms, 
and chameleon-like in their ever-changing hues, — so that 
any discussion of them, while, comet-like, they are actually 
approaching, or but recently receding, must be comparatively 
uninteresting, unless listened to while the revulsion is in 
progress. 

The only object of subsequent examination, is to profit by 
general financial results, when viewed as matter of history. 

The subjects discussed in this paper have been variously and 
ably treated, since this was written, — but I see no reason to 
change my opinion on any of the topics ; and am happy to find 
my views confirmed in reference to some suggestions by pro- 
posed legislative action, in other States, as well as in our own 
Commonwealth ; not that these questions are free from perplex- 
ity, or that honest and intelligent legislators can always be ex- 



A 



pected to find themselves justified for their acts by subsequent 
resuhs ; indeed, matters of finance form such a net-work, and 
our relations in this respect to each other as communities and 
as States are so various and complicated, that a measure which 
commends itself in the abstract, as right and judicious, may 
prove unwise and pernicious if undertaken by one State or 
portion of the community in opposition to others, or even with- 
out their cooperation. 



Financial Crises, Revulsions, and Panics. 

Much time and labor and talent have been expended, often 
fruitlessly, in the discussion of monetary concerns. Many and 
very able and learned treatises have been written upon the 
science of political economy. Successive ages have unfolded 
new facts, which successive champions have used with more or 
less ability, as the foundation for new theories as to the true 
nature and laws which govern that long-sought philosopher's 
stone, which, having converted other substances into gold, 
should next declare, how comn}unities were thenceforth to be 
affected by its passage from hand to hand, at home, and by its 
voyages back and forth, across mighty oceans, from continent 
to continent. The advance of society and the progress of civ- 
ilization have gradually worked a change in the laws which 
govern the commercial intercourse of individuals, communities 
and nations. Increase of population and of real and imaginary 
wants, brought about by the progress of the race in art, civili- 
zation, acquirements and luxury, have together operated to 
modify the laws and customs which previously regulated the 
exchanges of society, in the settlement of their mutual in- 
debtedness. 

Yarious theories have been advanced, and different schools of 
economists and financiers have contended foi- widely opposite 
causes, as explaining sudden and unlooked-for changes in the 
monetary world. Some of these theories have been elaborated 
into treatises of great power, ingenuity and learning; some 
have been wholly ephemeral. But it has often happened, in 
times past, and never in the history of the world has the 
remark been more true than at the present moment, that there 



is no harmonious sentiment among men of talent and long ex- 
perience, as to the causes of such sad and desolating and heart- 
rending annihilation of a real or imaginary fabric of wealth as 
we now witness as a community, and almost as a nation. 

It is not our purpose, nor will our present limits permit, a 
discussion of the nature, offices and mutations of money, or its 
representatives. It was necessary to say thus much, as a proper 
introduction to what we have to offer upon one branch of the 
general subject, inasmuch as many of the evils we suffer and 
of which we complain, often arise from hidden causes lying 
far remote in time and space from the actual results which 
affect our interests, favorably and unfavorably. We propose to 
discuss simply the causes of financial crises, revulsions and 
panics, with particular reference to the present confused and 
distracted condition of monetary affairs. 

The terms employed are obvious in their ordinary significa- 
tion ; their meaning can only be doubtful when applied with 
questionable accuracy : — 

Crisis — is defined to be that point in a disease in which it 
takes a decisive turn ; a turn or turning point, &.c. 

Revulsion — the turning of a disease from one part of the 
body to another ; the act of throwing back, &.c. 

Panic — a sudden and groundless alarm ; sudden fear or 
fright. 

These terms are obviously not synonyms, and in their finan- 
cial application are not convertible. 

A Panic relates to an excitement which has no sufficient 
cause. The results may be serious and far-spread, though 
without any adequate cause. A reported failure of a bank, or 
manufacturing corporation, or a large and well-known and 
extended mercantile firm, may affect the credit and even de- 
stroy the solvency of some one or more individuals connected 
with the supposed failed party, before the mistake can be cor- 
rected. Here is a panic, without real cause, producing serious 
and destructive effects. 

A Crisis assumes that the body politic, civil, religious, com- 
mercial or financial, is not in a normal condition, and has reached 
that point when a decided change must take place, either of 
improvement or in a retrograde direction. 

A Revulsion is used, financially, in accommodation to its exact 



meaning, but not in strict accordance with its primary significa- 
tion, as when applied to a diseased body or limb. As applied 
in matters of finance, revulsion is not the act of throwing con- 
fusion or disturbance from one part of the system to another 
part, previously healthy in its action, but the sudden and abrupt 
disarrangement of one or many of the leading financial agents 
or interests ; thus producing a jar in the machinery of an entire 
community or nation ; and occasionally, by sympathy, other 
countries, though far remote, are much shaken by the revulsion, 
even as the wires of a charged battery may carry the electric 
fluid round the globe. 

Not to go beyond the present century, we have witnessed 
many panics, far more crises, and a few terrible revulsions. 
The supposed or actual failure of a bank has often induced a 
panic, more or less extensive, in the community, followed by 
''a run" on the savings banks, or upon other perfectly sound 
and solvent institutions. When the public mind has become 
informed as to the true nature and extent of the evil which 
caused the first alarm, the panic has ceased, and very generally 
without much if any evil, as a permanent result. 

Financial crises are inevitable, in any extensive trading, 
commercial community ; and they cannot be traced to any 
one cause, or series or combination of causes. The expiration 
of the charter of the United States Bank ; the veto by Presi- 
dent Jackson of the new charter ; the removal of the deposits 
from the United States Bank to the Stale banks ; the contro- 
versy between the President of the Union and the President 
of the Bank, and the subsequent winding up of the United 
States Bank of Pennsylvania, severally produced a crisis in 
monetary affairs, besides other serious and almost numberless 
evils, panics and revulsions. 

The same may be said of important changes in our tariff 
regulations at home, or our commercial treaty stipulations with 
foreign nations, the prospect of war, the expectation of peace. 
There may be, and often are, panics attendant on the coming 
of these events ; but when they arrive, there is always a crisis 
in commercial affairs, a turn of tide in financial matters, — 
sometimes favorable, sometimes the reverse. 

The trade of a community was first conducted by barter, — 
one produced, another manufactured, — an exchange of labor 



for an exchange of products. Next came money, in a rude 
form, which has continued, with a great variety of changes 
and modifications, to perform the two-fold office of the repre- 
sentative of all values, and at the same time the possessor of 
an ascertained intrinsic value. 

There would be little danger of panics, or crises, or revul- 
sions, — certainly to any alarming extent, — so long as all the 
business of the world should be conducted by either or both of 
these agents and confined to them ; but a third agent, of great 
importance and vast power, for good and for evil, has been 
introduced, viz., the credit system. This system enters more 
or less into the business of all existing civilized nations, — 
indeed, it may be said to be essential to trade, — and it has 
contributed more directly and certainly, than any other human 
agency, to develop and promote the wealth and prosperity of 
our own favored country. This system has been more ex- 
tended and expanded, in our rapid and almost fabulous growth 
in numbers and wealth, than ever before ; and it is owing to 
this fact that financial panics, and crises, and revulsions have 
become so frequent among us during this century ; and it is 
undoubtedly owing to the rapidly attained and extensive com- 
mercial sway and influence which we, as a people, exert over 
other people and other governments, that this system has been 
gradually more and more inwrought into the financial policy of 
nations ; and, as a consequence, sometimes direct, at others 
more remote, our financial disturbances and embarrassments act 
and react abroad, so as to increase the number and often aggra- 
vate the extent of their panics and revulsions. It is sometimes 
asserted that a panic, which is admitted to be a groimdless 
fear, produces a financial crisis or revulsion. This could never 
happen, if business affairs were transacted upon a sound and 
safe basis. A panic may serve to hasten a crisis, which would 
otherwise have been postponed for a shorter or longer time ; it 
may aggravate the crisis and produce a severe revulsion, which 
might, but for this unnecessary alarm, have been far less seri- 
ous and extensive ; it may, by an indescribable sympathy, 
cause far distant corporations and communities to feel the jar 
and find their internal business arrangements disturbed, with- 
out any apparent cause at home, or any change in their ordi- 
nary routine of business. 



The long-continued suspension of specie payments by the 
Bank of England, from 1797 until May, 182;i, was not caused 
by a failure of the Bank, but by a panic, which so alarmed the 
government, that they feared to continue their discounts, and 
they were no less afraid to discontinue them. In one case, specie, 
as they supposed, would leave the country ; in the other, com- 
merce would be destroyed. When the Privy Council authorized 
this suspension, it was their expectation that it would be a tem- 
porary measure, to enable the institution to outride a squall, 
unharmed; but the event proved otherwise; specie continually 
advanced, and it was not until after a lapse of twenty-six years, 
that the bank was able to resume specie payments. During this 
suspension, the currency of the country depreciated, so that gold 
commanded a premium of fourteen or fifteen per cent. In view 
of, the condition of the bank and its debtors, at the time of sus- 
pension, the measure, though a bold one, was undoubtedly 
prudent, and the subsequent management highly judicious 
and advantageous, at once to the bank, the debtors, and the 
nation. 

As a panic arises from groundless fear, it is obviously impos- 
sible effectually to guard against its occurrence. 

A crisis may, or may not, be foreseen — may be postponed, or 
modified, but not often avoided, when causes arise which seem 
to justify the expectation of its happening ; — the same, in sub- 
stance, may be said of an anticipated revulsion. It is some- 
what remarkable, that though crises and revulsions have been 
anticipated and predicted, they have not been avoided by 
measures adopted by way of prevention ; but when avoided, it 
has been by some occurrence entirely unlooked for, — as, for 
example, the influx of gold from California into this country, 
which clearly prevented the happening of a revulsion, as severe 
as that which we now experience, but some years earlier, as 
the legitimate result of the operation of the tariff of 1846, so 
graphically predicted by Mr. Lawrence. It is also true, that the 
wisest and most experienced financiers have differed widely in 
opinion, as to the procuring causes of great monetary revulsions. 
The immediate or exciting cause has sometimes been obvious, 
but not one which is adequate to reveal the true explanation of 
the extended ruin which ensues. As, for example, the cause of 
the panic which preceded the present awful revulsion, was the 



unlooked-for failure of the Ohio Life and Trust Company ; yet 
that fact furnishes no explanation of the wide-spread ruin which 
has followed the insolvency of that corporation. Crises and 
revulsions are the necessary incidents and concomitants of a 
credit system ; but they do not follow any known law, and 
cannot be subjected to any such analysis of cause and effect, as 
will enable the most sagacious to understand and explain their 
modes of operation. There is no such settled and acknowl- 
edged analogy between one revulsion and another, as will 
enable us to classify or systematize them. There is no recog- 
nized condition of the banks, or currency, or trade, which has 
existed at the happening of two or more crises, so similar as to 
form the basis of logical deductions for the guidance of finan- 
cial pilots, like the discoveries which the progress of our coast- 
survey brings to light, for the guidance of the anxious and 
confiding mariner. 

Witness, for example, the two great and illustrative revulsions 
of the present century — certainly in this country — viz., those of 
1837 and of 1S57. 

Let us consider, for a moment, some facts connected with the 
crisis of 1837. During the three years beginning with 1834, 
the imports of this country exceeded the exports by the amount 
of $113,000,000,— $20,000,000 were destroyed by fire in New 
York in a short time in December, 1835, — $5,000,000 in wheat 
were imported in the winter of 1837. Prior to May, 1837, 
that part of our crops which had not been consumed, had been 
exported, and there were but $'73,000,000 of coin in the coun- 
try. Notwithstanding these astounding and alarming facts, 
their existence was either ignored or wholly unheeded. The 
preceding years of 1835 and 1836, had been years of almost 
unprecedented inflation, expansion and imagined prosperity — 
especially in England and America. 

The Edinburgh Review for July, 1836, says : " We are well 
assured that certain banks, with less than £500,000 of paid-up 
capital, have discounted bills and made advances to the extent 
of from five to six millions ; and the engagements of others 
have been even more incommensurate with their capital." Mr. 
Poulett Thompson stated, in the House of Commons, that the 
number of fresh companies on the tapis, for every imaginable 
object, from making railways in Hindostan to burying the dead 



10 

at home, were between three and four hundred, with an aggre- 
gate projected capital of nearly £200,000,000, 

In the United States, the fools and maniacs seemed to rule 
the day, and men of prudence were singular exceptions. Old 
men and young — men of experience in business, who had even 
amassed fortunes, and greater numbers who had earned a 
competence by industry, frugality, and perseverance — forgot all 
that they had learned, risked all that they had made, and, in 
their mad haste to be rich, paid enormous sums for lands which 
they had never seen, and water privileges which never existed, 
except in the imagination of some skillful draughtsman or ac- 
complished civil engineer, who was well paid for his valuable 
services. Cities were bought, built, sold, and deserted. In 
short, speculations in lands and stocks were carried to an extent 
before or since unprecedented in the history of this country. 
Imports meantime were regularly increasing, to supply the 
demands of those who figured themselves rich on paper, and 
drew drafts on the future to obtain credits from bankers, to pay 
England and France for furniture and finery for the present 
moment : — 

Year. Imports. Exports. Population. 

1833 #108,118,911 $90,140,433 13,820,000 

1834 126,521,332 104,336,973 14,190,000 

1835 149,895,742 121,693,577 14,600,000 

1836 189,980,035 128,663,040 15,050,000 ^ 

One would suppose that these figures, to say nothing of the 
madness and wildness of speculation in lands, houses, and 
goods, everywhere so rife, would have been like a handwriting 
on the wall, predicting the speedy downfall of our financial 
fabric ; but it was not so. The nation marched fearlessly on, 
to the very brink of ruin ; indeed, we might say, into the arms 
of general bankruptcy ; and in the room of. self-reproach and 
shame, one everywhere heard the cry of crimination and re- 
crimination — from friend of friend, customer of bank, bank of 
trade, community of government, government of banks, party 
of party. It is extremely interesting, quite instructive, and yet 
painful, to read the public documents of those days, containing 
the opinions of statesmen and financiers — Van Buren, Webster, 
Clay, Calhoun, Benton, Biddle, &c. — as well as the voluminous 
comments of the partisan, political and religious press. 
1 Bankers* Magazine, November, 1857. 



11 

Notwithstanding all the warnings and forebodings of coming 
retribution, and the acknowledged pressure in the money market 
for months, and even a year or more, preceding the terrible 
crash, the descent of the bolt from the cloud, when it struck 
the Commercial Emporium, came almost as unexpectedly as a 
thunder-clap in mid-day from a cloud unobserved in an appa- 
rently clear sky. *' It was only a panic." A great failure for 
millions was only a "suspension," and that but "temporary." 
The men of that day, the masses, even, were deluded ; they 
had made haste to be rich ; had forsaken their farms and their 
merchandise, and gambled away their possessions and their 
expectations. What caused this wide-spread ruin ? The first 
answer is, wild speculation and extravagance. What induced 
the former, and tempted to the latter ? Not one cause alone, 
but several combined. 

Hear President Van Buren, September, 1837: "The history 
of trade in the United States, for the last three or four years, 
affords the most convincing evidence that our present conditiou 
is chiefly to be attributed to over-action in all the departments 
.^f business ; an over-action deriving, perhaps, its first impulses 
from antecedent causes, but stimulated to its destructive conse- 
quences by excessive issues of bank paper, and by other facil- 
ities for the acquisition and enlargement of credit." And 
again : " The investment of thirty-nine and a half millions of 
dollars in unproductive public lands in 1835 and 1836, whilst 
in the preceding year the sales amounted to only four and a 
half millions." And then, after referring to investments in real 
estate, lots, houses, cities, grain, &c. : "The rapid growth 
among all classes, especially in our great commercial towns, of 
luxurious habits, founded too often on merely fancied wealth, 
and detrimental alike to the industry, the resources, and the 
morals of our people." After speaking of the great increase of 
bank facilities in England, he adds : " In view of these facts, 
it would seem impossible for sincere inquirers after truth to 
resist the conviction that the causes of the revulsion in both 
countries have been substantially the same. * * * * In 
both countries we have witnessed the same redundancy of 
paper money and other facilities of credit ; the same spirit of 
speculation ; the same partial successes ; the same difficulties 
and reverses ; and, at length, nearly the same overwhelming 
catastrophe." 



12 

Listen to Mr. Webster, at Wheeling, May, 1837 : " The 
discontinuance of the National Bank, the illegal removal of the 
deposits, the accumulation of public revenue in banks selected 
by the Executive, and for a long time subjected to no legal 
regulation or restraint, and finally the unauthorized and illegal 
treasury order, have brought us where we are. * * * * 
In fact, the government seems to have administered every pos- 
sible provocation to the banks to induce them to extend their 
circulation. * * * l will not say that other causes, both at 
home and abroad, have not had an agency in bringing about the 
present derangement. I know that credits have been used 
beyond all former example ; that it is probable the spirit of 
trade has been too highly excited ; that the pursuit of business 
may have been pushed too fast and too far. All this I am 
ready to admit." " But our Government," he adds, "has given 
a free and full scope to the spirit of banking. It has aided the 
spirit of speculation with the public treasure; and it has done 
all this in the midst of loud-sounding promises of an exclu- 
sive specie medium and a professed detestation of all banking 
institutions." 

We might add quotations from many other able writers and 
speakers ; but these present the opinions of men of acknowledged 
ability, and fully authorized to speak in behalf of the two great 
political parties of that day. They differed widely as to the 
measures of the day and as to the procuring causes of the evils 
which they acknowledged ; but whatever might have been the 
remote causes, they fully agreed in the proposition that the 
troubles then experienced were caused directly by the stiimdus 
of excessive credits and expanded bank facilities ; — over-trading, 
luxury, and extravagance were the certain precursors of down- 
fall of prices, annihilation of imaginary fortunes, extensive fail- 
ures, prostration of credit, and universal bankruptcy. The 
distresses and ruin of that day were undoubtedly more terrific 
and widespread in consequence of causes independent of over- 
trading, reckless banking and gambling speculations — such as 
the awful fire in New York, the short crop of breadstutfs in 
this country, Sic. ; but the revulsion would have happened 
without these events, with perhaps some mitigation of its 
severity. Hon. Nathan Appleton, in a letter dated October 12, 
1857, says : " There was nothing in that pressure " (of 1837) 



13 

" to be compared in severity to the present. It was wholly- 
owing to the unprincipled action of Mr. Biddle. The pressure 
of 1837 was wholly unlike the present. During a period of 
great over-trade, a few London houses imprudently created an 
American debt of fifty or sixty millions of dollars, by giving 
out their acceptances, to be met by other equally fictitious bills 
as they fell due. These houses fell into discredit, and informed 
their correspondents in America that the whole debt must be 
liquidated at once, or they must become bankrupt. This was 
in March, when no remittances could be made except in specie, 
which the banks were called on to furnish. The New York 
Banks went on for something over a month, when they found 
it impossible to continue. They then suspended, and with 
them the whole country. There is nothing like it now, as 
there is no foreign demand for specie." 

This is the opinion of one of the soundest merchants — sound 
in opinion and judgment as he is in fortune — of the present 
day, looking back upon the events of 1837. He attributes all 
the troubles to Mr. Biddle. The final crisis he alleges hap- 
pened in a time of " great over-trade^^'' and was consummated 
by the relations existing between the London bankers and their 
unwisely extended American debtors. Like Mr. Van Buren and 
Mr. Webster, he attributes the evils to an expanded currency, 
though each has his own way of arriving at his conclusion. 

Our commercial interests remained in an unsettled and unsat- 
isfactory condition from 1837 until 1842. Partial resumptions 
were followed by partial re-suspensions ; and it was not until 
the passage of the tariff of 1842, that we settled down into 
a condition of comparative tranquillity and commercial pros- 
perity. Many of the friends of the industrial interests of the 
country, to say nothing of political croakers, prophesied evil 
results as sure to follow from the passage of the tariff of 1846. 
The woollen interest certainly has languished, and the iron 
interest has been any thing but prosperous. It is not true, 
however, that the evils which were predicted have occurred, 
and it is mainly, if not entirely owing to the unlooked-for 
influx of gold from California, that they have been obviated. 
It was believed by many, who have felt that the woollen and 
other manufacturing interests were not only unprotected, but 
actually oppressed, by the wool duty, that the tariff of 1857 
19 



14 

would give a new impetus, in relation to manufacturing in- 
terests, by the virtual removal of the tax on raw materials. 
Time has not allowed the truth of these anticipations to be 
fairly tested, before the great revulsion of 1857 has overtaken 
us, atid this after a season of comparative prosperity, which we 
have enjoyed, with only the exceptions noted, for the past 
fifteen years. We come now to speak of the nature, causes, 
and remedy, of the present terrific financial revulsion. 

There are some features of marked resemblance of the pres- 
ent revnlsion to that of 1837. It is the opinion of a writer in 
the last number of the Bankers^ Magazine, that the causes 
which brought about the crisis of 1836-7, have again prevailed 
to a larger extent in 1856-7, such as "over-trading, undue bank 
expansion, long credits, excessive importations from Europe, 
speculations in public lands." These undoubtedly were the 
most direct and fruitful causes of the financial troubles in 
1837 — not all, however. 

When the first alarm was given, in August of the past year, 
no serious apprehension was entertained of any general or 
severe crisis impending ; and if the trading community had 
been in a safe condition, the failure even of the Ohio Life 
Insurance and Trust Company would not have produced any 
extensive disturbance, or startled the nerves of the most timid 
financiers. But this failure at once disclosed a fact which was 
not before understood, viz : That buyers, sellers, borrowers and 
lenders, were acting upon an imaginary, not a real basis ; — 
and that the mask of concealment was to be torn off, and we 
were to look upon each other, and upon property, as persons 
and property really exist, and not as we had fancied them to be. 

The revulsion of the past year does indeed resemble that of 
1837, in over-trading and over-banking ; but not in our imme- 
diate indebtedness abroad, or our true condition in respect to 
valuable resources at home. Then, our crops were short, and 
we were compelled to purchase large quantities of breadstuffs. 
Now, our country is teeming with products, and the West, our 
home granary, is groaning to be relieved of the harvest burden. 
Then, the London bankers doing business with this country, 
were hopelessly insolvent. Now, those occupying a similar 
position in London can secure the Bank of England to its 
entire satisfaction for a large loan to carry them successfully 



15 

and certainly through this crisis. Then, the loans in the 
State banks, stirnnlated by the removal of the public deposits 
from the United States Bank, had increased in five States, 
during one year, with such rapidity, that they had reached to 
the sum of $135,384,000 — this was in January, 1835; and 
in January, 1836, |I77,794,000 ; and in January, 1837, 
$193,519,000. This was the highest point of expansion, and 
it was at this moment that foreign exchange was almost un- 
manageable, from the exorbitant prices that it commanded. 
Now, there has been no such extraordinary stimulus exerted 
upon the State banks, and the rates of exchange are moderate 
and generally quite easy. 

We subjoin a table, for which we are indebted to the Bank- 
ers^ Magazine, showing a comparative statement of the banks 
of Massachusetts and New York separately, and of twenty- 
eight States collectively, for 1837 and 1857, giving the amount 
of specie, circulation and capital at each period, as follows: — 

1857. 

states. Specie. Circulation. Capital. 

Massachusetts, . . . $4,518,000 $25,000,000 $59,760,000 

New York, 15,000,000 28,000,000 101,000,000 

28 States,'. 63,206,000 176,750,000 373,960,000 

1837. 

Massachusetts, . . . $1,136,000 $9,430,000 $30,410,000 

New York 6,224,000 21,127,000 31,281,000 

28 States,' 33,169.000 126,856,000 218,075,000 

Bank United States, 7,650,000 15,444,000 35,000,000 

By this table we learn that the amount of specie in the banks 
at this time, is $63,000,000, against $41,000,000 in 1837— in 
addition to the balance in the national treasury of $6,000,000 ; 
showing, in the aggregate, nearly double the amount of specie 
now, inasmuch as in 1837 the Government deposits were 
included in the returns ; and it is fair, also, to presume that 
the specie in the country not in bank, is at least two-fold what 
it was in 1837. 

Thus it appears that while our nation is financially in a 
much stronger condition, in every respect, than it was in 1837, 
we are nevertheless overtaken by a fearful revulsion, which, 
notwithstanding the solid wealth of the country, the abundant 

' "Wisconsin omitted in 1837 ; Florida omitted in 1867. 



16 

crops, and the easy condition of our foreign exchanges, has, by 
a sadden and appalling blow, levelled oar mercantile commu- 
nity, and mingled the rash and the prudent, the considerate and 
the unduly extended, in one indiscriminate ruin. 

Are we asked what is the nature of this revulsion ? We 
answer : It is not a simple panic, caused by the failure of the 
Ohio Company — not any sudden change in the banking sys- 
tem, nor in the national tariff — not the result of any plague, 
pestilence, fire, or famine ; but it is the legitimate consequence 
of the credit system as applied to our institutions — not alone, 
though chiefly, in our mode of banking — not alone in over- 
trading — not alone in the rapidly increased luxuries and ex- 
travagances of our community, indulged in by men and women, 
young and old, those of wealth, and those who have ambition 
for display, without the means to gratify it prudently or even 
lawfully ; but these and other evils are necessary incidents of 
our credit system, as at present conducted. In comparing our 
present condition with the state of things in 1837, we observe 
that the result of that revulsion was a supposed bankruptcy to 
the amount of four hundred millions of property, which was 
wiped off by a general bankrupt act. What the present loss 
will be, it is impossible to say ; but thus far it has affected 
chiefly and most severely the manufacturing and the railroad 
interests ; it has reached corporations and individuals who 
counted their assets, a few months since, by hundreds of thou- 
sands, and even by millions. The year 1857 will be noted in our 
national history as distinguished for the extraordinary depre- 
ciation of property. What changes must result in the condition 
of estates in consequence of manvfacturing shares which 
cost one thousand dollars, and brought a large premium even 
on this for a series of years, selling for the amount of an annual 
or semi-annual dividend ! So of railroads, whose capital 
stocks amount to $181,000,000, to say nothing of bonds and 
floating debt, not included in this statement — these roads all 
insolvent, or unable to meet their engagements, and asking 
extensions. In short, this revulsion may be defined to be the 
dissolving of imaginary wealth, and the immense shrinkage in 
nominal value of all or nearly all that can yet be called wealth. 
The only exception seems to be real estate and State and City 
securities. 



IT 

We are next to inquire into the causes of the ruin which 
we witness. The answer to this is partly anticipated in the 
explanation already given. If the origin of this revulsion is 
in a diseased condition of the credit system, what is the cause 
of such disarrangement ? Is the system radically defective, 
and incapable of being brought into a healthy and normal 
condition ; or are we to look elsewhere for the cause of our 
terrible ills, and of the annihilation of the fabrics of imagined 
wealth ? Is there any mismanagement in the credit system, 
as applied to banks, or merchandise, which can be corrected, 
and thus any future recurrence of the evil avoided ? This 
inquiry more properly belongs to the last branch of our subject, 
viz., the remedy. 

We reply, then, credit is the air we breathe, as a community. 
As an agent in the hands of Providence, it has made us what 
we are. It has developed our resources, which else might 
have lain dormant till now ; it has given courage to youth ; 
nerved the arm of honest industry and enterprise ; brought 
down mountains and raised valleys ; converted natural agents 
into willing mechanics, to minister to our wants, to clothe our 
bodies, to print our books, to transport us across land and water, 
to carry intelligence with lightning'Speed from one extreme 
of the land to another, and from continent to continent. It 
has enabled us to develop the resources which lie concealed in 
the bowels of the earth, and thus to exhume the gold as well 
as the iron and the coal which are to aid in sustaining still 
increased and enlarged operations based on credit. 

Without credit we should not have been what we are, 
without it we cannot exist as we are, and without this we 
cannot advance as a nation beyond our present position, for 
centuries to come. 

It is useless to decry credit. There is not gold enough in 
the world to do the business of this country alone, if it were 
practicable to place it all at our disposal ; and if it were here, 
instead of being a blessing, it would be our greatest curse, as 
it would render us indolent, etfeminate and imbecile. All 
ambition to excel in art, literature, mechanics, and commerce, 
would die out, and we should settle down into national idiocy. 

It is only in particular applications of credit, that great ex- 
ception is taken to its use. Theorists there are, who would 



18 

recommend the almost total annihilation of credit as applied 
to business purposes ; but such visionaries are not common, and 
have no influence in forming public sentiment. There are 
those who admit the principle, but are very limited and narrow 
in their ideas of the application ; while the vast majority of 
the community, certainly in their practice, tend to the opposite 
extreme, and abuse the whole system so unwarrantably, as to 
make it sometimes a difficult, as well as an unwelcome task, to 
defend its proper use. 

There never was a time in the history of this country, when 
this system, as applied to banks, was so perverted and abused 
as by Biddle in a portion of his management of the United 
States Bank, and equally by the pet banks, for the period that 
intervened from the time they received the deposits, until the 
crash in May, 1837. 

So in reference to the building and running of railroads, and 
the conducting and financiering of manufacturing corporations ; 
there never has been a time of such egregious blunders and 
heart-sickening and stupendous frauds, as we have had brought 
to our notice of late. 

But abuse is no argument against proper use, any more than 
counterfeit disproves the existence of real coin ; on the con- 
trary, without coin there can be no counterfeit. So, without 
the benefits of healthy credit being apparent, there would be 
no temptation to risk soul and body to secure the benefits 
which are sought for in its perversion and abuse. The cause, 
in both revulsions, is the abuse of the credit system. This 
leads us to inquire more carefully into the particular kind of 
abuse, from which we now suffer. 

Mr. Appleton says: "There was no decided over-trade; 
there was no speculation except by a few houses, in sugar ; 
there was, no doubt, an excess of imports, but no greater than 
for several years; and the effect of these was wholly cured on 
the fifth of September, by the rate of exchange on London." 

What, then, is the cause ? Undoubtedly, in his judgment, 
the mismanagement of the New York banks. But with all 
deference to his sagacity and experience, is this, we would ask, 
a satisfactory solution of the difficulty ? Is the whole civilized 
world so subordinated to New York, that fortunes come and go 
at her bidding ? Suppose, for argument's sake, we admit that 



19 

the contraction in the line of discount, so great and so rapid, 
was the procuring cause of the failures there, and here, and 
elsewhere. Is it true, that not only all the banks, and all the 
manufacturing corporations, and all the railroads which are in 
debt, and all the commerce of this country, can be paralyzed 
and rendered nearly or quite bankrupt, because there is no con- 
certed movement, or very unwise action, on the part of New 
York bank directors ? But more than this ; must foreign 
houses fail ; must the Bank of England be compelled, for the 
first time in its history, to put its rate of interest at 10 per 
cent, and even then only escape a suspension of specie pay- 
ments by extending its circulation £2,000,000, and we know 
not how much further, beyond the limits prescribed by 
existing statute ? Must the Bank of France also be compelled 
to raise its rate ; and Vienna experience a financial revulsion ; 
and Lisbon raise its bank rate ; and Russiabegin to shake ? Is 
Mr. Appleton right in his opinion, that by adding a few millions 
to their line of discount, the New York banks could have pre- 
vented this series of revulsions. We admit there might have 
been a temporary relief, a short postponement of the evil ; but 
the trouble existed then, as truly as now. The development 
of the results of pre-existing causes might have been, probably 
was, hastened by the mode of management on the part of the 
directors of the New York banks. But what was the true cause, 
we ask ? Where lay the root of the evil ? To this simple inquiry 
every man of intelligence gives an answer peculiar to himself, 
or so general and comprehensive as to be of no practical benefit. 
Oar general reply is, the evil is to be found in human imperfec- 
tion, or the perversion of that which is meant for our good, and 
adapted to our prosperity, and thus far eventually overruled for 
our growth and happiness as a people ; the perversion of it, 
sometimes by cupidity and ambition — undue grasping — pride 
of excelling others in amount of business — eagerness to be 
rich, and alas! must we add, and not in solitary cases either, 
by fraud, embezzlement and cheating. The New York 
banks, in November, 1856, had a capital of ^55,969,743 ; loan, 
$105,536,476; specie, $12,110,834; circulation, |8,610,256; 
deposits, $88,524,264. In October, 1857, same banks — capital, 
164,474,000; loan, |101,917,569 ; specie, $11,476,294; cir- 
culation, .f 7,523,599 ; deposits, $-63,301,681. 



20 

On December 1, 1856, the Boston banks had a capital of 
131,960,000; loan, $51,054,304 ; specie, $2,791,000; circula- 
tion, $7,389,354 ; deposits, $15,469,088. The same banks, on 
October 10, 1857, had $31,960,000 capital; loan, $48,913,064; 
specie, $2,641,492; circulation, $6,355,202; deposits, $13,- 
439,880. We have taken the condition of the banks in New 
York and Boston a year since, and compared it with their con- 
dition on the 10th of October, which was within three days of 
the time of their suspension, in order that we may form a com- 
parative judgment of their condition as regards each other and 
their respective communities. It appears that the New York 
loan was only $3,500,000 less this fall than it was a year 
since; specie not $700,000 less ; cw-cwia^zonf 1,000,000 less; and 
the Boston loan $2,000,000 less, specie $150,000 less, circula- 
tion $1,000,000 less ; deposits $2,000,000 less in Boston, and 
$25,000,000 less in the New York banks. The greatest expan- 
sion of the New York banks was in May, 1857, when their liabil- 
ities were $108,000,000, with $12,000,000 of specie. On 15th 
Aug., $101,000,000 liabilities, with $11,360,000 specie. Here 
the contraction began, and continued till October 3d, when their 
liabilities were reduced to $76,000,000, with 11,400,000 specie, 
or $32,000,000 reduction from the highest point. It is of this 
rapid contraction, that Mr. Appleton so earnestly exclaims, '' Was 
the like ever known in the history of banking ? " Probably not, 
and yet we cannot regard even this as the true cause of our 
troubles. We find the banks in Boston standing about as they 
did a year since, no material difference of expansion between 
the fall of 1856, and the time of suspension ; while the deposits 
of the New York banks were very much diminished, and their 
bank capital increased $9,000,000. Their loan and specie and 
circulation not varying in proportion enough to be worthy of 
notice, if disconnected from the fact of the great reduction of 
deposits. The inference we draw from this statement is, that 
the effect of the rapid contraction in New York would neces- 
sarily have been to cause trouble by sympathy in other cities, 
hut is not in itself svjp,cient to account for a tithe of what we 
witness. The question is often asked : " Why did the New 
York banks contract so rapidly? " The answer is obvious, viz., 
for self-preservation. They had undoubtedly made extensive 
loans on call, on the pledge of bonds and railroad securities. 



21 

At any rate, their loan was not of such a character as to enable 
them to meet their liabilities, without a very great and rapid 
curtailment of accommodation to their business customers, 
and hence the panic commenced ; and having once begun, it 
progressed with intensity, creating every day increased dis- 
trust and anxiety for the future, as it occasioned inconven- 
ience and distrust for the present. But what has this sudden 
panic in New York revealed ? While the figures in Boston 
remain unchanged, what do our eyes behold and our ears 
hear ? What do the statements of failed firms and bankrupt 
corporations unfold as to the business which has been done 
of late years, and the value of the promises which have been 
given to banks and to capitalists, in the form of notes receivable. 
What have the New York banks been doing ? Lending to 
railroads, when they should have been sustaining sound and 
prudent business men in their regular transactions. Why have 
prices ranged at such enormous rates for provisions — and spec- 
ulation even in the necessaries of life been so rife — but that a 
class of forestallers have been enabled, by means of bank facil- 
ities, which should properly be called imaginary currency, to 
buy up extensively, what would else have quietly found its 
way to market and been taken and dispensed at safe and living 
prices. Hence the increased circulation of our country banks, 
forced out unnaturally to the West, and in the first alarm of 
trouble in New York poured back without stint, and in the 
case of New England banks, coming to Boston for redemption, 
thus creating a specie balance against Boston which should 
have been met at once by the country banks themselves, but 
must be borne quietly by Boston for a season ; certainly so far 
as very many banks were concerned, until their collection 
paper could repay their specie indebtedness. 

On the whole, the cause is not in the credit system when 
properly conducted — nor in the banking feature of that system 
solely, even when abused — nor in the over-trade alone, though 
to a considerable extent — nor is it to be attributed to luxury 
and extravagance alone — nor to embezzlement only — nor to 
the exhausted state of our resources as a nation and our internal 
wealth — nor alone to any one cause — but in part to most of these, 
and still more to the mischievous practice of our merchants and 
manufacturers, in granting excessively long credits, and in un- 
3 



99. 



warrantably extending their business ; also to the habit of bank- 
ing upon far too small a specie basis, occasioned by the clamor 
of stockholders for large dividends, to enable them to keep up 
an extravagant and ostentatious style of living ; also to the 
unwise and very rapid extension of railroads beyond the pres- 
ent wants of the country, and without means to pay for them ; 
also to the inflated prices of articles of necessity and comfort, 
which this expanded state of the currency has occasioned ; and 
finally, here in New England, to the wretched policy of con- 
fiding the whole manufacturing business to the unchecked, 
unscrutinizedj unobserved, and sometimes irresponsible man- 
agement of a few individuals; allowing mammoth corporations, 
with an unwieldy amount of capital, to be managed by single 
individuals; uniting the office of financial management with 
that of selling agent, and quite frequently confiding large num- 
bers of these corporations to the management of single firms or 
individuals ; and still further might be added, to great facil- 
ities for foreign credit, stimulated in part by a desire to encour- 
age deserving young men, and sometimes by an ambition to 
outdo other foreign agencies in the amount of credit granted 
and profits earned. This is our Pandora's box. 

Before attempting to suggest any remedy for the existing 
troubles, or any measures to prevent a recurrence of financial 
revulsions, we pause for the purpose of adverting to one fruitful 
cause of the disturbance of our nicely-balanced credit system. 
We refer to our immense foreign debt. It is estimated that 
British capital alone, invested in American securities, amounts 
to the sum of £90,000,000 sterling, or $450,000,000; while 
the whole gold coinage ^ of this country, according to the 
American Almanac, put into circulation, from 1793 to 1856, is 
only $396,895,574, the silver $100,729,602, and the copper 
$1,592,206, making a total of $498,197,383— showing conclu- 
sively that the aggregate gold coinage of the country, if now 
at our disposal, would be insufficient to pay the debt we owe 
to England. And for what do we owe this amount? Princi- 
pally for railroads, and other works of internal improvement. 



' The President in his Message speaks of $400,000,000 of gold from California 
since the mines were worked. This does not conflict with our statement as to 
coinage — as his remark relates to the yielding of the mines, large amounts of which 
have never reached our mints. 



23 , 

?se railroads are for the most part deeply in debt ; generally 
more is due for them than has been paid ; and it would be 
indeed passing strange, if this immense fimded and floating 
debt — always in the market, more so in a panic, and from 
necessity, pressed upon the market, here and in England, in a 
time of financial revulsion — did not contribute as much as any 
cause, to disturb the exchanges of the country and the world, 
and in fact to create distrust, and rapidly to increase a want of 
confidence on the part of capitalists and money-lenders at home 
and abroad. 

Probably there is no one more fruitful cause of impairing 
confidence between communities and individuals, and embar- 
rassing trade, and forcing banks to stop discounts, in order that 
they may meet liabilities and provide funds for heavy depos- 
itors, than this same unwieldy, enormous foreign debt, the very 
interest of which is a heavy national tax. 

We speak, however, of this as a disturbing cause of the 
equilibrium of credit, and not at all by way of discouragement. 
Our resources, humanly speaking, are unbounded — developed 
and developing. What millions can be fed from our Western 
products ! What armies can be clothed and fed and made 
comparatively rich by our manufacturing resources, properly 
managed ! We have no need to look upon the existence or 
cause of our revulsion with despair or even despondency, but 
only to learn wisdom for the future. 

We turn, then, to the more welcome task of suggesting rem- 
edies. One of our most intelligent and influential merchants, 
when asked to give his opinion of what was best to be done in 
the present condition of things, said he supposed " we should 
go on again, as we had done, until the next crop of fools came 
along." 

Probably this answer nearly covers the ground. All history 
teaches the lesson that mankind are extremely slow to profit 
by the lessons of the experience of others. Generations and 
individuals desire to try for themselves, and feel more confi- 
dence in their own sagacity and foresight, than in the counsels 
of those who have preceded them. 

Notwithstanding this admission on our part, we deem it not 
entirely useless to make certain suggestions as to the future, 
which, if they serve no other purpose, may be as beacon-lights 



•24 

to warn others of the dangers we have discovered, and of the 
rocks upon which we have seen fatal shipwrecks: — 

1. We should not increase our foreign debt. Let us pause, 
if necessary, in our railroad enterprises, until we have occupied 
the ground already prepared for husbandry and the mechanic 
arts ; we shall need all that we have done, and probably most 
of what has been projected ; but we can afford to wait a while 
before launching new enterprises which wilt increase our in- 
debtedness and impair our resources, and keep our credit system 
in constant exposure to crises and revulsions. 

2. Business must be individualized. By this we do not 
mean that we are opposed to corporations, when honestly and 
prudently managed — far otherwise. We have always regarded 
corporations as democratic in their character, and in theory, at 
least, affording the man of limited means an opportunity of 
nsing his earnings to as much advantage proportionably as the 
large capitalist ; but it is necessary, to the practical working of 
this theory, that the corporation should be intelligently, eco- 
nomically, and honestly conducted. If the stockholder buys or 
sells shares under a wrong impression of the true condition of 
his property, owing to false information given him by the offi- 
cers of the company, he is worse off than if there were no such 
institutions, because he loses what he had earned, and may 
have to pay for the ignorance or fraud of others. But further 
than this, we regard the present mode of managing manufac- 
turing corporations as eminently unwise and unsafe. Too 
much power and discretion is confided to a few persons. The 
financial officers of these companies should be entirely distinct 
from the selling agents ; the books and accounts of each should 
be absolutely separate and regularly and carefully examined by 
competent men. The practice has prevailed of intrusting the 
business of several corporations to one firm, or even one indi- 
vidual. This is wrong. If this mode has some advantages in 
theory, it has not worked well in practice, and ought to be 
changed at once. 

The sentiment of the business community seems to harmon- 
ize upon the point, that part, at least, of our troubles may be 
ascribed to the habit of giving long credits. This is so gener- 
ally conceded, that we may hope the remedy will be at once 
and effectually applied ; it seems to be too plain a case to 
require additional argument. 



\ 



\ 

25 

Probably too much has not been paid, in the aggregate, for 
doing the work of corporations ; but, undoubtedly, top much 
has been paid to individuals for attempting to do impossibiUties. 
If several had received what has been paid to one, the work 
would have been far better performed, and there would have 
been a more just and equal division of labor and compensation. 

There has been unnecessary extravagance in wareliouses, 
stores, and the fitting up of costly mills — splendid to behold, 
highly ornamental to new cities, attractive to purchasers of 
lots, but ruinous to poor stockholders. 

3. Business must be brought within safe and proper limits. 
We are no ultraists. We do not advocate an exclusive specie 
currency. We do not contend that men in business may not 
owe more than the actual capital they possess ; but we do con- 
tend that it is unsafe for them, for their families, and for the 
community, that they should be so very much extended as 
they have been — often owing several times the amount they 
are worth. In fine, a spirit of mad and reckless speculation 
has ruled the hour, and we see and deplore its dire effects. It 
has pervaded all classes of society, and nearly all varieties of 
occupation. In their haste to be rich, men have forgotten 
to be wise, and sometimes even to be honest. Gambling in 
stocks, selling to deliver, without a prospect or even possibility 
of ownership, is highly demoralizing, and ought to be prohib- 
ited by law. But there may be gambling in goods as well as 
in stocks; and it is entirely unwarrantable and highly preju- 
dicial to the best interests of the community, that men should 
contract debts for many times the amount of their capital. 
Bankruptcy and ruin are almost sure to follow, and others who 
are innocent become involved in ruin and suffering. As a 
remedy, let the banks discourage over-trade and undue expan- 
sion, by withholding discounts. If they will do this, and cap- 
italists will not be tempted, by high rates of interest and "gilt- 
edged paper," to aid in stimulating over-trade and unhealthy 
expansion, we may anticipate a radical and very desirable 
reform, at once, in this particular. We look to such a reform as 
one of the most probable and desirable fruits of the discipline 
which the community is now suffering. 

4. Our banking system needs reform. The tendency of the 
human mind is always to extremes. When a system works 



26 

well, there is a disposition to push it to its ne plus ultra; when 
it is found to be defective, totally to condemn it. Onr banking 
system affords a good illustration of this tendency. It is a 
good system — it has worked well — it has developed our re- 
sources — aided enterprise, and talent, and industry, in amassing 
wealth ; but it has been pushed too far — it has been sadly mis- 
used and abused — and the whole community are the sufferers. 
In this state of things, many are disposed to condemn the 
whole system ; others, to substitute a new theory of their 
own ; and others still, to engraft a new system on the old one. 
Probably there may be some advocates for another United 
States Bank, or a large and powerful government institution 
for the regulation of the exchanges ; others would prefer some- 
thing resembling the plan of the Bank of England, in its fea- 
ture of a separation of the issue from the loan department ; 
while some, probably very few, are open advocates of an affili- 
ated, or an independent, private Sub-Treasury. We are no 
advocates for any of these radical changes. Communities 
become adapted to certain modes of doing business, and it 
would be an injury to them to exchange their mode for one 
which is better in theory, if not adapted to their particular 
wants. 

We should deprecate any radical change of our laws in 
relation to banking. Improve — amend — but do not pull down 
or destroy. Experience has shown us the evils and the advan- 
tages of our present plan. We know not what would be the 
disavantages of a change, and we cannot be sure of the benefits 
which are claimed for any new system, when applied to our 
case. Our counsel is, to amend the present law in such par- 
ticulars as recent events have shown it to be defective — among 
which we should suggest the following : — 

1. Limit the circulation of each bank at least to the amount 
of its capital stock paid in — and even considerably less than 
this, we should prefer. 

2. Limit the right of discount to once and a half its capi- 
tal, instead of double the amount of capital, as is now allowed. 

3. Prohibit the issue of any bills under five dollars, forth- 
with ; ^ and under ten dollars, after January 1, 1859. A viola- 

' Since writing the above, we have read the President's annual Message to 
Congress, in which he recommends the issue of bills of no smaller amount than 



27 

tiori of this prohibition to work a forfeiture of the charter of a 
bank, ipso facto. 

4. Allow no bank to discount, unless it has in its vaults, at 
the time, at least fifteen per cent of its capital in specie, ex- 
clusive of special deposits. 

5. Change the State tax from capital to circulation. 

6. Prohibit banks from borrowing money on interest, at any 
rate. 

7. Allow the banks six per cent instead of five, for com- 
pulsory loans to the State. 

8. Prohibit banks from loaning on railroad securities or 
shares of manufacturing corporations. This we would advise, 
partly for the purpose of discountenancing large demand loans 
which ought to be converted into business loans, and partly 
to obviate any recurrence of the unwieldy demand stock and 
bond loans, that have aided in increasing the panic and pre- 
pared the way for the present revulsion. 

9. Regulate the system of exchange paper, so that the usury 
laws shall not be evaded under cover of the price of exchange. 

10. We would be pleased to have the legal rate raised to 
seven per cent, so as to keep capita! at home, instead of 
offering an inducement to send it to New York for investment ; 
another advantage would result from this change, viz., there 
would be less eagerness to strain every point to make one per 
cent additional for the stockholders. 

With these changes, our banks would be as well adapted to 
meet the wants of the community as could be contrived if we 
were to begin anew and have the choice of all existing schemes 
of banking. Among other remedies proposed, in some quarters, 
is a modification of the tariff. We have no doubt that this 
might be essentially improved. We have always advocated 
incidental protection to American industry in the levying of 

twenty dollars, and ultimately of fifty dollars. We deem this impracticable, if not 
impossible to accomplish; — and there is an objection in the minds of many 
judicious financiers even to the changes which we propose, on the ground that if 
we exclude small bills by statute in our own State, we only offer a bounty to the 
neighboring States to furnish our small currency. There is some force in this 
objection, and experience has shown it to be the case in States which have adopted 
it — and the only effectual remedy would be, if such a thing were practicable, by a 
general law of the United States, regulating the issue of small bills. This possi- 
bly might have been done, under the powers granted by the Constitution to the 
General Government at the outset, but it is probable that if such a power existed 
at first, it has been waived so long as that the constitutionality of its exercise now 
is at least doubtful. 



• 28 

duties. We believe that a part of our present evils may be 
ascribed to the payment of large sums for imported iron and 
woollen fabrics, which might have been expended more wisely 
and profitably to feed and clothe our own people and educate 
their children ; but we are also opposed to frequent changes in 
the policy of government as to revenue and protection. It is 
of the first moment to our citizens, engaged in commerce and 
in manufactures, alike to know what they can rely upon in 
projecting their voyages and enterprises. Vacillation in the 
rates of duties is ruinous to any business, and it is of far more 
consequence to know with certainty what policy is to be pur- 
sued, provided it be not ultra free trade, or protection to the 
degree of prohibition, than what that policy shall be. For 
these reasons we do not advise any re-opening of the tariff 
question, fearing that it may be productive of more evil than 
good to the business community. 

We have thus considered the nature, the causes, and the 
remedy of the sad revulsion with which the whole community 
is now visited^ and in which we have the sympathy of the 
commercial and manufacturing world. It is a sad picture 
that we behold ; a people furnished by a kind Providence 
with all the means necessary to secure their happiness, with 
plenty of food, and the precious and the useful metals and ores 
in abundance beneath their feet ; in fine, with all the elements 
of prosperity — and yet completely paralyzed — distrusting and 
distrustful — seeing their riches take to themselves wings and 
fly away, they hardly know why or whither — " men's hearts 
failing them for fear," and not knowing in what to engage or 
from what to refrain, whom to trust and whom to refuse — the 
poor crying for bread and asking for labor, and the rich know- 
ing not how long they shall have any value in the things 
which they possess. 

God grant that we may be guided wisely in these matters, 
with nerve and resolution to bear the ills we cannot escape, 
and with prudence and calm discretion to ascertain and apply 
efficient and seasonable remedies to remove our present ills, and, 
so far as possible, to prevent their recurrence. 

November 10, 1857. 



LIBRARY OF CONGRESS 




014 060 412 4 



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